The latest on California politics and government

May 16, 2014

The Legislature's nonpartisan fiscal analyst estimated Friday that state revenue through June 2015 would be $2.5 billion higher than what is in Gov. Jerry Brown's revised budget plan, including $2.2 billion in additional money during the coming budget year.

But the Legislative Analyst's Office cautions that much of the additional revenue it forecasts would be consumed by larger obligations under the state's constitutional school-funding guarantee. It also acknowledges that its revenue numbers might turn out to be wrong.

"While our best estimates right now are for general fund revenues to be over $2 billion higher than the administration's projections in 2014-15, changes in asset markets and the economy could materialize that would result in less or more tax collections than our office now projects," it wrote in Friday's report.

Friday's review comes three days after Brown released a revised $156.2 billion spending plan that reflects $2.4 billion in extra revenue compared to his January proposal. It allocates most of the money to higher-than-expected Medi-Cal costs.

The plan features a rainy-day reserve he negotiated with legislative leaders and which would receive $1.6 billion in 2014-15. Also, the plan includes an extra payment to finally pay off $15 billion in deficit borrowing approved a decade ago.

The LAO offers warm words for the administration. "Overall, his plan takes a careful approach to state finances, and he deserves much credit for that," it said. "Under this approach, the state would improve its chances of managing the next significant state revenue downturn with little in the way of the drastic budget cuts required during the last few recessions."

Liberal advocacy groups, though, have said the governor's proposal fails to begin restoring billions of dollars in cuts during the recession. Senate President Pro Tem Darrell Steinberg, D-Sacramento, this week challenged the governor to "do a little lifting" to meet the concerns of his caucus members, suggesting that funding for the governor's prized high-speed rail project could otherwise be a tough sell.

The analyst's office earlier voiced support for the revised plan's proposal to spend $100 million toward paying off the $900 million the state owes local governments for complying with state mandates before 2004. It would be the first payment in almost a decade.